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The co-working revolution

09 May 2017

What can cities do to create open workspaces where entrepreneurs can connect and grow jobs?

An explosion of new workspace

I first came across the notion of a co-working space in Sweden, probably about 12 years ago now. I remember agreeing with my colleague when she commented 'This will never take off; it's just a funky room with a shared kettle'.

How wrong we were. Just over a decade later Europe's cities are full of open workspaces, meanwhile spaces, co-working spaces, incubators and accelerators, providing temporary and sometimes permanent accommodation and support for entrepreneurs, start-ups and scale-ups. 

Take London as an example: the first cited co-working space was the Hub in Islington, which opened in 2005. The current workspace providers map now includes more than 400 different spaces and a recent report 'Start Me Up: The value of workspaces for small businesses, entrepreneurs and artists in London' (IPPR, December 2016), estimates that these host 31,000 people, and have generated £1.7bn in Gross Value Added and an additional £40.80 for every £1 invested. As many as one in four of London's SMEs working in the digital and creative sectors have used an incubator, accelerator or co-working space and, while in 2009 co-working accounted for 5% of serviced office lettings, by 2014 this had risen to 20%.

This picture is mirrored across Europe's cities as the growing numbers of self employed people and entrepreneurs recognise the value of workspaces which offer shared resources, flexible access and a curated programme of community support. As well as a broad shift towards knowledge-based work, technology is of course also key to this explosion as it enables people to work more flexibly from just about any location with good wifi.

However, open workspaces are coming under threat in some urban areas. When the affordable housing agenda, and the planning policies behind it, push affordable workspace down the list of political priorities, (would-be) entrepreneurs can risk being squeezed out. More progressive administrations recognise that a sustainable city needs to consider liveability and affordability as well as businesses, communities and residents, hand-in-hand.

URBACT cities and the need for workspace 

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In its publication 'Job Generation for a Jobless Generation' URBACT noted the importance of spaces and places for connections between young people, employers, innovators and entrepreneurs. More recently the TechTown Action Planning Network has produced an interesting podcast and slide deck considering what medium sized towns and cities in particular can do to grow spaces where digital entrepreneurs can connect and grow jobs.

In this article, I’d like to draw on – and supplement – URBACT’s work so far on cities and accessible workspaces. It is very much an opinion piece based on my own experience in this landscape. I’ll present some examples of co-working spaces in URBACT cities, then consider the role of the city and its stakeholders and why this is relevant to ALL cities and contributes to many parts of the integrated sustainable urban development agenda.

But first, some definitions

As with so many things there are many definitions – some better than others – for incubators, accelerators and co-working spaces. These terms are often used as if they are interchangeable. They are not. So, for the purposes of this article, I will draw upon the definitions used in a recent NESTA report 'Business incubators and accelerators: the national picture' (April 2017). This considers an incubator as being defined by the following characteristics:
 
  • 'Open-ended duration (exit usually based on the stage of the company, rather than a specific time frame)
  • Typically rent/fee-based
  • Focus on physical space over services
  • Admissions on ad-hoc basis (not cohort-based - i.e. people can join at any time rather than being recruited at set times of year)
  • Provision of services including mentorship, entrepreneurial training
  • Often provide technical facilities such as laboratory equipment
  • Selective admission (but typically less so than accelerators)'

And lists the following characteristics for accelerators:

  • 'Fixed duration programme (usually between three and twelve months)
  • Typically growth-based (payment via equity rather than fees)
  • Often provide seed funding
  • Focus on services over physical space
  • Admission in cohorts
  • Provision of startup services (e.g. mentorship, entrepreneurial training)
  • Highly selective'

Of course, the support offered by both incubators and accelerators can also be delivered 'virtually' and accommodation is therefore not always in the mix.

Co-working space is different. It is a much looser term and, perhaps not surprisingly, organisations operating in this space range from highly commercial providers to small grassroots community groups. Again for the purpose of this article we will consider them to provide a combination of workplace and supporting facilities at affordable rates with easy in-out contractual conditions. The renting of space – or desks – is set up to attract users who require ad hoc and short term access to workstations and supporting facilities such as meeting rooms. The format of space is usually open plan and of an informal setting, aimed at facilitating an interactive and creative networking environment to form a sense of community among users.

But enough of definitions – it's just important that city practitioners and policy makers are able to differentiate between these different elements which all have unique places within an entrepreneurship ecosystem. Of course physical spaces do not in themselves grow jobs. It is the interaction of the different components of this ecosystem that create the magical conditions in which companies can start, grow and flourish. As well as access to the right space in the right place at the right time, early stage companies also require access to market, finance, talent and networks to grow and scale effectively. But workspace is a vital component

So, let’s look at some workspace examples...

Let's now look at three (very) different examples of successful workspaces from the URBACT-supported TechTown Action Planning Network. These have been chosen to provide a flavour of a few different models, types of ownership, users and community approaches.

Le Bivouac, Clermont Ferrand, France

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'Le Bivouac - StartUp Booster' is an accelerator operating in seven key 'domains' – health prevention, sustainable agricultural systems, cyber security, sustainable living, intelligent systems, mobility and energy transition. Set up by the public sector and with the city's mayor as its president, perhaps one of its unique characteristics is the engagement of some really big players from both the public and private sector (the municipality, region and corporates like Michelin, EDF, Limagrain, Orange and the Caisse d'Epargne etc), making Le Bivouac a huge networking platform through its partners’ own networks.

Rather than asking these organisations to contribute funding, Le Bivouac's model relies heavily on them for support, training, coaching, expertise and mentorship, valuing this at over €1m per year. In return, it launches two calls for start-ups each year. The two parallel aims are:
 
  • to enable its (public and private sector) partners to find the expertise and skills they need to develop their future business model.
  • to enable start-ups to develop long term partnerships with large businesses, to find innovative ways to address their challenges and thereby to provide opportunities to scale.

In terms of space itself, Le Bivouac offers 1000m2 of dynamic workspace with state of the art digital and tech facilities. But perhaps more importantly it facilitates access to real business opportunities and to the region's research and innovation system of universities, R&D centres, etc.


Digital Media Centre (DMC), Barnsley, UK

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The DMC is part of the city's suite of business support known as 'Enterprising Barnsley' and home to several business advisors - so resident businesses just have to knock on the door to discover a whole range of advice and support. As you walk into the building's airy atrium, you are greeted by the smell of coffee and the sound of ping pong balls.

Of course there’s more to the DMC than the building it’s based in, but the fact that it is a beautiful, well-designed space does make a difference. The building is capable of hosting numerous digital and creative businesses as well as a wide range of business development workshops, seminars and events on everything from online marketing and digital law to HR issues and tender writing. More info on the business events programme is available here. For very new entrepreneurs, there is a specially-designed programme of support called the Launchpad service, again, based within the DMC. Read more here.

One of the interesting things about the DMC is that, having started with an externally contracted operator who only achieved an occupancy level of 53%, a decision was made to bring management of the centre ‘in house’ within the council – to control operations, revenue and expenditure more closely, and align the centre with the Enterprising Barnsley business support service.

From this, a new model was developed positioning a financially viable DMC as a hub for creative and digital businesses, skills and knowledge. The focus was on generating more and better jobs and businesses in Barnsley. Financial viability required a significant uplift in occupancy at a price considered high for the area; shifting to a recognisable ‘hub’ model required more and better activity to be programmed, and significant improvement to the services provided.

Through the ambition and vision of the plan and the hard work of the whole delivery team, one year into the new approach, the occupancy rate had reached 75%. In April 2017, two years in, occupancy is at an all time high of 95%, and the team have won a national award for business transformation. A significant contributor to successful growth has been introducing an ‘open door’ policy, welcoming any businesses and people who want to be in the DMC. The improved animation and service offering has helped to establish a recognisable ‘hub’, whilst new external partnerships have widened reach and provided recognition for the quality of activities. As part of this service, a dedicated ‘Enterprising Barnsley’ Business Development Manager offers inclusive business support to client companies, helping them achieve growth.

Skola6, Cesis, Latvia

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Skola6 is a very different type of co-working space. Housed in a redundant school building, it is Cesis' newly founded creative and digital industries centre. It was conceived, designed and co-created by the local community, and anyone from the local community can access the services and opportunities provided there. Unlike the new and shiny Barnsley DMC, it has grown organically and has a calmer, more homely feel.

Here too however, small businesses (mostly sole traders) can access the workspace – including hot desking, co-working and a studio / workshop space – as well as business support and shared equipment, which they might not have been able to afford individually. Events are organised by and for young activists and entrepreneurs.


Different business models and drivers

Just within these three examples we can see different revenue models (memberships, monthly fees, tenancies), different physical spaces, different community offers and importantly when considering the role of the city, different types of ownership or operator such as public, private, community-led or charitable.

Let’s consider this ownership issue for a moment: Coming back to our London example, it is interesting to note that around 40% of the city’s open workspace provision is run by the charity sector, with a further 12% being run by social enterprises or community interest providers. 37% of open workspace is operated by the private sector and just 8% is run by educational institutions, local authorities and cooperatives.

So where does that leave our original question:

What can cities do to create open workspaces where entrepreneurs can connect and grow jobs?

Tips for cities for successful workspace development

My view is that the most important message for cities is that they are one cog in a very big and complex wheel of activity when it comes to providing open workspace. Whatever the economic and political conditions, it is simply not possible for cities to solve the workspace challenge on their own. What they can do is to provide high quality collaborative leadership – 'to walk the talk' – and facilitate the conditions in which open workspace operators, in different forms as described above, can develop and thrive.
 

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These spaces work best where they are co-created by, and with, entrepreneurs rather than for entrepreneurs. The best examples build upon the differences of the place rather than copying what others are doing in other cities. There are lots of ‘anywhere towns’ so when considering co-working spaces it is good to remember that places have meaning and spaces often do not. Therefore cities should start with their own culture, assets, characteristics and heritage and ensure that these spaces build on this provenance. In this instance, there is no one-size-fits-all model, and it is best not to simply cut and paste approaches from other cities.

Cities can also facilitate access to public and private sector funding for workspace – perhaps helping other stakeholders to navigate around local European Structural and Investment Fund opportunities. They can consider using discreet social impact or affordable workspace clauses in local planning policies and / or be creative and progressive in how existing clauses are interpreted. Cities also have a role to play in brokering in users of the space. For example they might help local enterprise agencies or business support providers to navigate the start-ups they are supporting around workspace options. Or they might refer institutions, which could act as ‘anchor tenants’ to new or growing open workspace providers.  

Many municipalities also own redundant public buildings, and often these are perfectly suited to meanwhile or more permanent co-working facilities. Libraries and schools are increasingly being used to co-locate community, education, workspace and business support services. As well as providing invaluable workspace, this sort of co-location has many additional benefits in terms of inclusion, youth aspiration and ambition and entrepreneurship education. All of this is really important at a time where young people increasingly need to carve out their own career in a changing world of work.

As is clear from the examples above, this is not just about property. A good co-working space needs a high quality community offer with wraparound business support services and other reasons to visit. An open door policy can be part of this, but may not work everywhere. Cities have a clear role in scoping out and supporting such a wraparound offer. They can provide access to data and other evidence of demand for, and supply of, workspace and linked services, and help to identify market gaps.

Whether cities fit out the spaces themselves or with other stakeholders, good quality design is also important. And this does not necessarily mean expensive design. It is possible to create a great co-working hub with very few resources, providing the community is active and willing. Skola6 in Cesis is a great example of this and the municipality has played an active role in bringing this space to fruition.

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There are of course lots of examples of co-working spaces targeting specific sectors – tech and digital, artists and creatives, makers, social entrepreneurs and food entrepreneurs to name but a few. Cities can also drive innovation through 'mixicology' – co-creating spaces which bring some of these communities together – to disrupt and generate innovation and creativity.

So it is important to look beyond the building and to prioritise relationships and people. These spaces need to be places where people want to be – where they feel a sense of belonging. It seems that across Europe, good coffee is an important part of this. This might seem a bit superficial and maybe that is the point. In co-working, small things done well can make a massive difference. So, operators – whether public or private – need to listen to and learn from their users, customers and data. In the DMC, attracting a local, start-up coffee cart was in direct response to demand from users and has reaped real rewards in terms of community engagement and ownership.

And why does this matter for ALL cities?

Some of you reading this will probably be thinking (hopefully;) 'Nice piece; now back to the day job'. I would urge you to stop for a moment and think a bit more about how the workspace issue is relevant to you and your city, or your URBACT network. Maybe consider the following:

The contribution of these spaces to economic growth is clear. However, there are many other benefits, which may not seem to immediately apparent:

Open workspaces can make a clear contribution to placemaking and regeneration. Not only can they bring vacant, unused and dilapidated buildings back into active economic and community use but also they can provide an opportunity for people to work close to where they live; they can create a real local ‘buzz’ and also have potential to increase footfall and local spend. Maker spaces and spaces for artists, creatives and food entrepreneurs can also add to an area’s overall cultural offering.

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They can also help address disadvantage more generally, for example by providing an opportunity for local charities and community interest groups to provide affordable workspace for the communities they serve. They are a living, breathing example of how the workplace is changing, and they offer excellent opportunities for young people to better understand what the labour market of the future is likely to look like. When linked to educational establishments there is clear potential to create mutually beneficial relationships:  young people can gain invaluable work experience, making them more ‘work-ready’; start-ups and small businesses get access to fresh young talent, helping them to develop.

Linked to this, open workspaces build real communities. A place for peer-to-peer interaction, which would otherwise not be possible. These collaboration opportunities lead to, and feed from, new ideas, new networks and new audiences. Ultimately they create more jobs, but the community is about much more than that. It makes the neighbourhood and the city more attractive to residents and businesses alike – old, new and potential. Surely that has to be a good thing.

…and let’s not forget the fact that they often provide great coffee!

So, ultimately, at least in one sense, maybe my colleague was right 'it's a funky room with a shared kettle' but she was wrong in her gloomy prediction. It is abundantly clear that open workspaces and co-working WORKS!!

 

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